Consignment clothing shops used to be ragtag stores where
sellers unloaded discarded garments on people who simply
couldn't afford to buy brand-new clothing. But today's
consignment shops are something new--attractive stores stocked with
kindly worn designerwear that looks just like department store
merchandise, except for the discount prices.

"[Consignment] stores have become very popular as our
society has become more familiar with recycling," says
Christine Jobes, vice president of member services for the National
Retail Federation in Washington, DC. "[Consumers have also]
become very practical about shopping, and [consignment] is just
another form of value-oriented shopping."

Consignment stores differ from secondhand stores in that the
garments actually belong to consignors--individuals who ask the
shop to sell the clothing they no longer want, whether it's
because they've grown a size or two or need to make room in
their closets. When the garment sells, the consignor and the shop
owner split the profit (typically 50-50). The beauty of this
arrangement for start-up business owners is, there's no need to
pay for inventory until it's sold. As a result, you can open a
shop with very little start-up capital.

Most consignment shops sell women's suits and designer
sportswear, but menswear and children's clothing can be found
as well. Some shops also sell such accessories as hats, belts,
costume jewelry and shoes.

Marcie Geffner is a freelance writer in Los Angeles.

Closet Cash

Loyce Jones, 48, opened her consignment clothing store, Bon Ton,
in Dallas in January 1994, with the help of her sister and
brother-in-law, Sharon and Edward Anderson. They had just $400 in
start-up funds and an inventory culled mainly from their own
closets. "My sister is a clotheshorse, and I'm one of
those people who shifts sizes," explains Jones. "Sharon
had hundreds of things she had never worn or barely worn because
she's been working in retail forever. For the kind of stores
she worked in, she had to [dress well]."

Jones spent the $400 on paper, copier supplies, sales tickets
and a used cash register. Bon Ton was profitable immediately,
although the bottom line took a temporary hit in June 1996, when
the store moved from its original location in the basement of an
apartment building to its current location in a downtown corporate
plaza. The rent, which consumes about 20 percent of revenues,
didn't go up much, because the new landlords were eager to get
a retail shop into the building. Bon Ton's 1997 revenues were
about $50,000.

Success In Store

Mary Jane Nesbitt, 51, opened her consignment clothing shop,
Nine Lives, in Los Gatos, an upscale community in California's
Silicon Valley, in February 1993. Before opening the shop, Nesbitt
had worked for many years in the legal department of a commercial
real estate brokerage. Her decision to leap from employee to
entrepreneur came during a soul-searching walk with her husband,
David Butcher.

"I was unhappy and frustrated," Nesbitt recalls.
"We had talked about the possibility of my opening a
consignment shop for maybe six months. We got to this end of town,
and my husband pointed across the park and said, `Look, that space
is for rent. This is it. You're doing it.' "

The storefront to which Butcher pointed is ideal for a
consignment shop, Nesbitt says, because there's plenty of
regular foot traffic. The next-door neighbors are a bakery and a
dry cleaner. Down the block is a U.S. Post Office, and across the
street is a park where community functions are held.

Nesbitt started the business by taking $17,000 out of her
retirement plan to cover initial lease costs, racks, hangers,
shelves, bags, printing costs, lighting and other necessities. Her
husband, a Webmaster for a large networking company, wrote the
shop's custom financial and inventory management software.

Nine Lives grossed $180,000 last year. More important, Nesbitt
is doing something she loves: "My satisfaction in life is so
much greater."

Stocking Up

The number-one challenge facing start-up consignment shops is
finding enough good-quality merchandise. "You've got to
learn how to say `No, thank you' to consignors," Nesbitt
advises. "There's an enormous temptation to take things
that aren't quite what you want just so you can fill the shop.
That's the worst thing you can do."

Nesbitt found potential consignors were hesitant to give
her their clothing before the store had opened. "But once the
store was open, clothing came in droves," she says. Until the
shop was adequately stocked, Nesbitt used Styrofoam boards covered
with sheets to block off the back and make the shop appear fuller.
As her inventory grew, the false wall was gradually moved back and
eventually eliminated.

Only a tiny portion of Nesbitt's inventory comes from
sources other than the general public. A few garments are samples
consigned by clothing sales representatives. Other items come from
a local men's store.

Jones and her partners take a different approach. Bon Ton sold
items from individuals at first but now buys about half its
inventory from manufacturers' close-outs.

Ingenuity and caution are essential in finding the right
merchandise. "Be creative," says Jobes at the National
Retail Federation. "Look to your friends. Look to garage
sales. Look for natural fibers, wools, cottons, linens and silks.
Those seem to sell better. Don't buy styles that are outdated;
those aren't going to sell."

Getting The Word Out

Once you've obtained good merchandise, the second challenge
facing a start-up is marketing to potential customers. Jones and
her partners rely on a multifaceted marketing campaign that
includes handing out fliers in front of the shop, advertising in a
local business newspaper and holding fashion shows at consumer
expos targeted to women. A local modeling group volunteers to help
with the fashion shows in exchange for the experience and
exposure.

Your advertising methods should be tailored to your area and
target market. Due to her Silicon Valley location ("arguably
the most computer-literate place on earth," she says), Nesbitt
has found her Web site, which her husband designed, to be her best
and most cost-effective promotional tool. In fact, besides the
Yellow Pages, it's now the only advertising she does. "We
get an astounding number of people in the door because they found
us on the Web," she says.

As important as advertising is an attractive, appealing shop. A
successful store must be fresh and clean, and merchandise must be
displayed to emphasize its style and quality.

"It shouldn't look like a junk store," cautions
Jobes, who says a beautifully designed shop goes a long way toward
dispelling any hesitation customers may have about buying used
clothing. "You want the atmosphere to be conducive to buying,
so it should look as good as it possibly can."

With the right combination of stylish clothing, marketing smarts
and a flair for display, your consignment clothing store will soon
be putting customers on the best-dressed list--and putting you on
the road to business success.

Resources

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